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COURSE TOPIC THE HINDU EDITORIAL TIMES 3 - JUNE -2018
TITLE FUEL FRACTIONS
HEADLINE Both the Centre and States must bite the bullet to cut taxes on petrol and diesel
FUEL FRACTIONS Last Wednesday, the public sector oil marketing companies cut the prices of petrol and diesel by one paisa a litre the first reduction for a while in motor fuel prices that had been frozen for 19 days in the run-up to the Karnataka elections, only to creep up thereafter. Not surprisingly, the Centre, already under fire for persisting with high fuel taxes despite the rise in the global prices of crude in recent months, faced fresh flak over this cursory cut. The same day, the Kerala government approved a reduction in the sales tax on motor fuel products to effect a cut in prices per litre in the State starting June
FUEL FRACTIONS These developments are worrying for citizens because corruption, social exclusion and barriers to fair economic competition continue to be more prevalent in autocracies. Expectedly, in Bangladesh, while the ruling Awami League Party has rejected the study as baseless and claimed the country to be a "100 percent democracy", the main opposition Bangladesh Nationalist Party (BNP), has said the report reflects the true nature of Bangladesh's current political climate.
FUEL FRACTIONS For the BJP-led government at the Centre, gearing up for several Assembly elections this year followed by the general election in 2019, the pressure to check pump-level fuel prices is intensifying. Several formulations are said to be under consideration to soften the blow to the consumer, including a reversion to old-fangled ways such as asking oil producers to bear some of the burden.
FUEL FRACTIONS But there still remains great reluctance to consider the option of reducing excise duties that were raised nine times between November 2014 and January 2016 when global crude oil prices had gone down. It is in this context that Kerala's decision to slash the sales tax on fuel changes the narrative of the debate as States have also been raking in easy oil revenue
FUEL FRACTIONS An SBI research report reckons that prices could go down for diesel by 3.75 and petrol by 5.75, a litre, if only this tax-ontax-included-price anomaly was fixed. Giving up easy money is never easy, but the recent robust collections from GST should embolden both the Centre and States to bite the bullet now.
FUEL FRACTIONS Rising crude prices spike inflation and the trade deficit, putting pressure on the rupee and GDP growth. Industry has warned that domestic oil pricing policies are hurting the nascent recovery, and global rating agencies are already slashing India's growth expectations for this calendar year, citing the oil issue
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